The Guts of BBH
The Biotech
Holders have rallied almost 13 points over the past three trading sessions.
However, this fast rally is now meeting Fibonacci price resistance from 89.80-94.80.
This zone includes 10 price levels. The previous two rallies in this strong
down trending market were 14 points and 17 points respectively. For BBH to pull
together a longer lasting rally it will need to clear this resistance zone.
Otherwise, it will simply be a feeding frenzy for the short sellers. Now, if
we clear this price zone, the next meaningful resistance doesn’t come into play
until the 105 area.
To get a better
understanding of what is fueling BBH, I have included four charts of biotech
companies that represent roughly 50% of BBH. Those stocks are, Amgen
(
AMGN |
Quote |
Chart |
News |
PowerRating),
Genentech
(
DNA |
Quote |
Chart |
News |
PowerRating), Immunex
(
IMNX |
Quote |
Chart |
News |
PowerRating), and Millennium Pharmaceuticals
(
MLNM |
Quote |
Chart |
News |
PowerRating).
There is a common theme in each of these stocks just like BBH.
1) The daily trend is
still down
2) Key Fibonnacci price
resistance zones immediately above current prices
3) The current rally is
symmetrical or similar to previous rallies in this downtrend
So what’s my
game plan?
1) Don’t take any long
positions until this daily resistance is cleared. If it is cleared to the
upside, then I’ll consider buying pullbacks into Fibonacci price support.
or
2) If resistance is not
cleared consider taking short trades with stops just above swing highs made
into our price resistance zones.
Regardless
of the outcome I have the key price zones to make decisions against whether
I’m trading BBH or individual biotech companies. Take care!
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